Wednesday, Nov 29, 2006

Dollar in trouble!

BBC: Dollar plunges on world markets

The dollar has continued its recent decline, falling to fresh 20-month lows against the euro as concerns grow about a US economic slowdown.
In early Wednesday trading in the Far East, the dollar was hovering at about $1.32 against the euro, and also down against both sterling and the yen.

The dollar's continuing weakness came after US data showed a fall in both the price of goods and consumer confidence.

Analysts now predict US interest rates will have to be cut early next year.

Posted by tyrellcorporation @ 09:35 AM (2793 views)
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1. tyrellcorporation said...

I'm confused. Why does a falling dollar imply that the Fed will cut rates next? (as mentioned here)

Surely it should be the other way round.

Wednesday, November 29, 2006 09:38AM Report Comment

2. d'oh said...

tyrellcorp - I presume to kickstart the economy. It does highlight the bind that they are in, as to attract investors to hold dollars one would normally raise interest rates.

Something about being painted into a corner....

Wednesday, November 29, 2006 09:44AM Report Comment

3. tyrellcorporation said...

It'll be interesting to see how it pans out then as the Fed are still grumbling about inflation risks...

Wednesday, November 29, 2006 09:46AM Report Comment

4. Littledeb said...

I am in no way any expert in this but as I have a US bank account (due to owning property over there), I was considering shipping all of my UK savings to the States whilst the dollar is so weak and bringing it back later... do we think it is likely to recover or continue to decline? Thanks.

Wednesday, November 29, 2006 10:07AM Report Comment

5. Randomkevlar said...

I'm with tyrell (more human than human) corp here...why does this automatically mine a rate cut?>? didn't I see that Ben Bernsrglahfvbl ? the US bank gov dude, on the BBC saying yesterday that they was not much of a slowdown and he is unlikely to cut rates in the near future!!!

If you watch and read enough of the BBC's world coverage the amount of contradictions is really quite surprising.

Wednesday, November 29, 2006 10:11AM Report Comment

6. Sam said...

a better article covering the same news story.

won't post it seperatly as I think there seems to be too many posts these days about the same source.

Wednesday, November 29, 2006 10:44AM Report Comment

7. David20040_0 said...

Quick everyone to the American Ebay to take advantage of the weak dollar.

Wednesday, November 29, 2006 10:49AM Report Comment

8. Cyril said...

I can't see lowering interest rates would help either. How could Americans be persuaded to borrow any more? Thet are already flat broke.
US personal debt = 11 trillion dollars. US Govt debt = 8 trillion dollars. You do the math (as they would say).

Wednesday, November 29, 2006 10:52AM Report Comment

9. p. o. o. r said...

I seem to remember that back towards the end of 2004 they were talking about the dollar reaching $2.2 to the , however this did not happen - Why? Will it get there this time? Great news for me as I am off on Hols to America soon.

Wednesday, November 29, 2006 10:55AM Report Comment

10. tyrellcorporation said...

At this rate we'll all be buying houses in the States!

Wednesday, November 29, 2006 10:59AM Report Comment

11. Mrmickey said...

But as Sterling is just a paper currency like the Dollar all we have to do is print more of the stuff to keep parity with the Dollar. I'm sure the government won't have a problem with that.

Wednesday, November 29, 2006 12:25PM Report Comment

12. paul said...

It's not just the dollar taking a hit, JPY and GBP are losing value too.

Wednesday, November 29, 2006 01:28PM Report Comment

13. The Capitalist said...

The beginning of hard times in the US and therefore the rest of us...this is what the contrarians have been predicting. Good news for Gold bugs (I'm long).

Greenspan's great legacy!!

Wednesday, November 29, 2006 01:29PM Report Comment

14. inbreda said...

The military coup in Thailand hardly affected my currency (I sold USD to buy THB). Since then it's been an incredibly good investment. Thanks to all on this site that encouraged me to do this.

Long may America suffer!!!

Wednesday, November 29, 2006 01:42PM Report Comment

15. denzil said...

Surely this is nightmare stagflation scenario. Bernanke is talking of inflation being a problem again and growth is struggling.
Cut rates and he realises that the inflation genie may be releases from the bottle.

Wednesday, November 29, 2006 04:13PM Report Comment

16. The Baldman said...

Denzil. 100% agree. The US has been living on borrowed time (and money) for at least 10 years. Where do you think the stagfaltion scenario will hit next??? (hint Gordans mircale of borrow from the future)

Wednesday, November 29, 2006 04:19PM Report Comment

17. Chillilizard said...

"I'm confused. Why does a falling dollar imply that the Fed will cut rates next? (as mentioned here)"

tc - yeah badly worded artcle - the one is not the logical conclusion of the other. Journalists!!!!

Wednesday, November 29, 2006 04:50PM Report Comment

18. indiablue19 said...

No offense to the Thai Baht, but please go easy. My State and private retirement are in dollars! This is really just more encouragement for me to abandon the UK and live in Euroland.

Tyrell....The dollar has suffered since Bush came into "power." Clinton had the dollar at 1.39 on the pound, if you can possibly remember so long ago. Investment rates were something worth doing. Since Dubya came along, the currency has nose-dived along with its credibility worldwide and we are as you see on value. It occurs to me also that the currency would benefit from an interest rise drawing world investment, but then there's that pesky housing balloon that must be pumped up at all costs....A lesson if ever there was one for a world that bases it's GNP on the value of its own back yard -- rather than its manufacturing and investment environment -- and also those who think the printing of "funny money" is really all that funny.

Wednesday, November 29, 2006 05:01PM Report Comment

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